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So why don't investors discount a valuation because the fact that revenue is undefined, and not treat it like a near divide by zero?
by mahyarm 12y ago
So why don't investors discount a valuation because the fact that revenue is undefined, and not treat it like a near divide by zero?
- pwang 12y agoIt's important to remember that as brokers/agents of LPs' money, VCs price risk. The valuation of companies is distinct from that, and is normally the principal component of the pricing of the risk. However, if the market is in a mode of skyrocketing/bubbling, a larger component of the price is how much you can hype up the company before your exit, and basically trade on your own credibility/brand. In a crude sense, it's a form of a confidence scheme...